"Embezzling 6 Billion Won in Service Fees"...Former Jungang Park SPC CEO Gets 4 Years in Prison

Loans Defrauded Using Fake Documents
Two Executives Receive Suspended Sentences

Court.

The former CEO of a special purpose company (SPC) involved in the Gwangju Jungang Park District 1 private park special project has been sentenced to prison for embezzling tens of billions of won in company funds by fraudulently claiming service fees.

According to the legal community on February 3, the 12th Criminal Division of the Gwangju District Court (Presiding Judge Park Jaeseong) sentenced A (59), former CEO of Bitgoeul Jungang Park Development SPC, to four years in prison on charges of fraud in violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes.

The court also sentenced SPC executive B, a former and current executive who was indicted together for participating in the crime, to two years and six months in prison, suspended for four years, and C to two years in prison, suspended for three years.

A and others were indicted on charges of embezzling a total of about 6.086 billion won, including project financing (PF) loans from financial institutions, on four occasions in connection with the Gwangju Jungang Park District 1 development project between November 2021 and December 2023. They allegedly fabricated documents to make it appear as though they had carried out services such as preparing business proposals and providing consulting services for the purchase of land and obstacles, even though the work was not actually performed.

The investigation found that they submitted false electronic tax invoices and contracts, as well as execution requests obtained by deceiving those with authority to approve the disbursement of funds, to a trust company. They exploited the fact that the victim trust company conducted only a formal review of whether supporting documents were on file.

In particular, it was revealed that A transferred a substantial portion of the embezzled funds to acquaintances' accounts to launder the money, then had it returned and appropriated it for personal use.

The court stated, "The defendant, in his capacity as CEO, led the crime and defrauded more than 6 billion won," adding, "He directly violated the purpose of the fund management trust agreement, raising concerns that the smooth progress of the project would be hindered."

The court continued, "Most of the defrauded funds have not been recovered, and the circumstances after the crime are not favorable," but added, "It was taken into account that some services appear to have actually been provided and that part of the money received had the nature of consideration."

With respect to accomplices B and C, the court held, "Although they neglected their duty to supervise in their capacity as auditors and participated in the crime, suspended sentences are imposed in light of their degree of involvement and the actual profits they obtained."

Meanwhile, A has already received a final sentence of three years in prison in a separate case on charges including fraud for accepting money and valuables in return for lobbying for permits and approvals related to a local housing association project.

This content was produced with the assistance of AI translation services.